Annual Report

MVAICMotor Vehicle Accident Indemnification Corporation

ANNUAL MEETING, MAY 19, 2017

AT THE OFFICES OF THE CORPORATION 100 WILLIAM STREET · 14TH FLOOR

NEW YORK, NY 10038

2016

MVAICCHAIR’S REPORT

Chair’s Report 2016

The Motor Vehicle Accident Indemnification Corporation (MVAIC) was created 57 years ago by the New York State Legislature to meet the needs of those New York State residents without automobile insurance, who were injured in an accident caused by an uninsured or unidentified automobile. The insurance companies selling automobile insurance in New York State fund MVAIC in order to provide this public service. The Corporation’s fund was created to provide compensation for bodily injury and no fault benefits to these innocent victims who qualify for these benefits under the law.

I am pleased to report that MVAIC continues to meet the claim needs of New York State residents and the Corporation is prepared to carry out its civic and fiduciary responsibilities in 2016.

2016 Activity

For 2016, MVAIC took care of the claims of 1,760 residents and paid a total of both Tort and No Fault claims in the amount of $17.2 Million, compared to 2015 when MVAIC handled 1,810 claims and paid a total of $16 Million.

In 2016, the number of Notices of Intent (to make a claim) received was 20,775. The number of notices declined was 19,987; the number of notices qualified was 788 and the total number of claims pending qualification review for the year of 2016 and prior is 2,239. The corporation closed with a year-end surplus of $7.5 Million.

The Board of MVAIC and the MVAIC employees are proud of the public service that is provided to New York State residents in need. The Corporation’s improvements in technology, our website and staff education and training have all contributed to the quality and efficiency of the service MVAIC provides to New York State residents in need when no other automobile insurance options are available to them.

Darryl Rahn Chair

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MVAIC

NATURE OF BUSINESS

HISTORY OF THE CORPORATION Motor Vehicle Accident Indemnification Corporation (MVAIC) was created by the 1958 Legislature by enactment of Article 17-A (now Article 52) of the New York State Insurance Law to provide compensation for injuries to persons who, through no fault of their own, were involved in accidents with hit-and-run drivers, operators of stolen vehicles or uninsured motorists. This law became effective on January 1, 1959. MVAIC operates as a non-profit Corporation and, as provided in the New York Insurance Law, is exempt from all taxes imposed by the State of New York or other political subdivisions except those levied on real property. NO FAULT As a result of the enactment of Section 5221 of the Insurance Law, effective December 1, 1977, the corporation also became involved in the payment of no-fault, first-party benefits as of that date. It should be noted that the Corporation must provide for the payment of such first-party benefits only to qualified persons who have complied with all the applicable requirements of Article 52 of the Insurance Law. Amendment 19 to Regulation 68, effective September 1, 1985, permits MVAIC to arbitrate no-fault cases thus eliminating the necessity of commencing Declaratory Judgment Actions in unresolved coverage questions. Qualified claimants (persons who are residents of the State of New York or of another state that has a similar program, and who do not own automobiles or are not resident relatives of a household where there in an insured vehicle) receive maximum benefits under the no-fault law. NEW REGULATION 68 Effective April 2002 Regulation 68 was amended as follows: Time Frame to file a claim with MVAIC is 30 days from 90 days Time frame for health providers to submit medical bills has been reduced from 180 days to 45

days from day of service. WRONGFUL DEATH STATUTE Chapter 665 of the Laws of 1979 increased MVAIC’s coverage in death actions from the former 10,000/20,000 limits to 50,000/100,000 limits. RECODIFICATION OF ARTICLE 17-A (MVAIC LAW) Bills amending the Insurance Law effectuating the substitution of Article 52 for the old Article 17-A were passed in both the Senate and Assembly, signed b the Governor and became law effective September 1, 1982.

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MVAIC

NATURE OF BUSINESS

LEGISLATIVE AMENDMENT Effective July 22, 1989, Section 5208 (a)(1) was amended by the legislature and the bill signed by the Governor. This amendment extended the time from 90 to 180 days within which a claimant must file his/her affidavit of “intention to make claim” with this Corporation, only if there is an identified defendant. The 90 day time limit is still applicable to hit and run cases. Further, if the claim was originally against an insured person whose insurance carrier has denied the claim, then the affidavit must be filed within 180 days after the receipt of said disclaimer or denial . In June 1995, the New York State Legislature amended Section 1 Paragraph 1 of subsection (f) of Section 3420 of the Insurance Law to increase the New York financial responsibility limits from $10,000 per person, $20,000 per accident to $25,000 per person and $50,000 per accident. These limits are equally applicable to uninsured claims submitted to MVAIC. This law took effect January 1, 1996. New Legislations Enacted The New Legislation enacted in 1999 effective March 1, 2000. Self-Insured 5014 A (Chapter 511 Laws of 1999) this new law increased the Self-Insured assessment per vehicle from $1.50 to $3.50. The DMVB will continue to handle the self-insured fees as previously done. New Regulation 68 (No Fault)-Repeal February 1, 2000; for accidents on or after February 1, 2000. The major provisions are: Notice of PIP claim must be made in 30 days rather than 90 days Health Service providers must present their bill to the insurance carrier and/or MVAIC within

45 days after the date of treatment rather than 180 days in current regulations. The new regulation authorizes PIP insurers to do an Examination Under Oath (EUO) of PIP

claimant. Wage Loss Claims-must actually be made within 90 days from the date of accident instead of no

requirement The arbitration rules have been changed with the AAA, now being responsible for

administrating all conciliation and administration. Previously, the Insurance Department handled conciliation and more administration including medical fee schedule.

Also effective February 1, 2000 the monthly interest penalty rate is 2% simple instead of 2% monthly compounded.

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MVAIC

NATURE OF BUSINESS

SOURCE OF FUNDS The Corporation is funded through levies on insurance companies transacting automobile liability insurance in the State of New York in accordance with Section 5207 of the Insurance Law. Other sources of funds include fees collected from self-insurers by the New York State Department of Motor Vehicles under Sections 316 and 370-4 of the Vehicle and Traffic Law, investment income and subrogation recoveries. INTERNAL ORGANIZATION MVAIC is composed of the following units:

Core Support Unit — The Core Support Unit enters all notices and bills received into the claim system.

Qualification Unit — The Qualification unit determines whether a claimant is qualified

under Article 52 to present their claim to MVAIC. This unit creates and processes all claims submitted to MVAIC. If an Event qualifies, the processor forwards the files to the managers of the No Fault and Tort Departments.

Tort Unit — This unit processes all liability claims. The maximum recovery for injury to one

person is $25,000 and the maximum recovery for injury to two or more persons as the result of one accident is $50,000. In case of death the applicable coverage is $50,000/100,000.

No Fault Unit — This unit processes all No Fault claims. If you are injured as the result of a

motor vehicle accident involving a financially irresponsible motorist and you have complied with certain statutory requirements, MVAIC will pay you up to $50,000 for your reasonable and necessary hospital and doctor's bills. The No Fault unit processes these claims.

Recovery Unit — The Recovery unit pursues recovery efforts. Legal Unit — Law Office of Jaime E. Gangemi, in-house attorney staff, handle all Tort suits Accounting Department — Provides ongoing fiscal management services to the organization. Special Investigation Unit — Provides in-house investigation services for questionable

claims.

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2.9 3.1

3.6

4.1

3.6

4.7 4.89

5.4

5.0

5.5

5.2

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Allocated Expenses 2006-2016 In Millions

5

7.5 7.2

6.7 7

7.8

6.6

7

6.1 6.4

5.5

6.9

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Tort Indemnity Payments 2006-2016 In Millions

6

9.8

7.7 8.2

11.2

12.7

11.3 11.5

13

10.6 10.7 10.3

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

No-Fault Indemnity Payments 2006-2016 In Millions

7

2.0

1.2

0.8

0.9

1.0

1.3

1.5

1.1

0.9

1.4

1.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Subrogation Recoveries 2006-2016 In Millions

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2,158 2,111

2,736 2,714 2,651

2,477 2,399 2,432

2,644

2,396 2,484

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Number of Cases Outstanding Tort and PIP 2006-2016

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19,966 19,983

23,077 22,403

23,632 23,686 23,703

25,431

21,714 22,367

24,812

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Outstanding Case Reserve End of the Year Tort and PIP

2006-2016 In Thousands

10

8,949 8,957

10,024

12,708 12,830

14,216 13,308

15,666

16,657

18,190

20,775

2,238 1,966 2,026 1,879 1,941 1,526 1,789

2,290 1,821 1,810 1,760

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Notices of Intention to Make Claim Received Number of Claims Opened Tort and PIP Combined

2006-2016 Notices Received

Claims Created

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20 21 21

20 20.2

28 29

32.5

35.5

30 30

5.6

11.1

7.9

3.5

-4.9 -6.2 -5.8 -5.8

5.2

7.5

4

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Assessment/Surplus 2006-2016 In Millions Assessment

Surplus/Deficit

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MVAIC

BOARD OF DIRECTOR

DARRYL B. RAHN

Vice President, Director of Liability Claims and SIU

UTICA NATIONAL INSURANCE GROUP

Darryl Rahn is Vice President with Utica National Insurance Group with responsibility for liability

claims oversight and SIU operations out of Utica’s Home Office in New Hartford, NY. Before joining

Utica National, Mr. Rahn practiced law, concentrating in insurance defense and general civil litigation in

Utica, NY.

Mr. Rahn earned a bachelor’s degree at State University of NY at Cortland, and a J.D. at Syracuse

University College of Law.

While practicing law, Mr. Rahn was active in the New York State Bar Association, where he served for

six years in the House of Delegates. He remains involved in the Oneida County Bar Association, and

has for many years served as attorney advisor for the local high school mock trial teams.

He lives in New Hartford, NY with his wife, Concetta, and their three children.

May 2016

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MVAICBOARD OF DIRECTOR

STEPHANIE COLLINS

P&C Claims Manager

STATE FARM INSURANCE COMPANIES

Stephanie Collins began her career with State Farm Insurance as an Auto Claim Representative in Buffalo,

New York in 1993. She moved onto Claims Automation & Procedures in 1995 prior to being promoted, in

1997, to a Team Manager in Ballston Spa’s Auto Claim Central. Stephanie has held several leadership

positions with State Farm Insurance and has relocated several times throughout her career. She’s worked as

a Team Manager in Upstate New York, Metro New York and Miami. Stephanie was promoted to a Claims

Section Manager in Orlando Florida in 2007. In 2012 Stephanie was a promoted an Auto Claims Consultant

and relocated to Corporate Headquarters. Stephanie assumed her current position as a P&C Claims

Manager in January 2014 and is currently located in our Ballston Spa, New York Operation Center.

Stephanie is a graduate of State University College at Buffalo, New York and obtained her MBA in

Corporate Finance from Dowling College, in Oakdale, New York in May of 2006.

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MVAICBOARD OF DIRECTOR

MAURA CLANCY

President

CLANCY & CLANCY BROKERAGE LTD .

Maura T. Clancy is the President of Clancy & Clancy Brokerage, Ltd., an independent insurance agency

based in Garden City.

Ms. Clancy is the Public Member on the Board of Directors of the Motor Vehicle Accident Indemnification

Corporation and was appointed to the position by Former Superintendent of Insurance, Greg Serio. She

currently serves on the Board of Regents for Winthrop University Hospital in Mineola, N.Y. and recently

served as the Chair of the Health Committee for the Rotary Club - District 7250.

Ms. Clancy served as the President of the Chamber of Commerce of the Willistons for two years, where she

resides. She also serves on the nominating committee for the AAA of New York, Inc. Ms. Clancy was the

first woman to be elected to the position of Chair of the Board of the Independent Insurance Agents and

Brokers Association of New York State (IIABNY) in the organization’s 120-year history and also served as

the organization's Chair of the Nominating Committee.

Ms. Clancy was elected to the position of President of IAAC, Inc. and IAMAC, Inc., subsidiaries of

IIABNY. She served as Chair of IIABNY’s task force on Automobile Insurance Reform and as the media

liaison in IIABNY’s CORE program. In the past, she was the first woman elected to be the President of

Nassau County’s Independent Insurance Agents Association.

Ms. Clancy is a past Chair of the National Agents Council for Travelers Insurance Group’s Personal Lines

division. She also served on Merchants Insurance Group’s Agents Council. She is a past member of the

Ireland-U.S. Council for Commerce & Industry, Inc. and the President’s Council for the Long Island United

Way.

Previously, she was Vice Chair of the Board of Trustees for the Old Westbury School of the Holy Child

where she attended high school. She has also served as a director on the boards of several charitable

organizations including the American Red Cross of Suffolk County, Children’s House, the Long Island

Insurance Community, Harbor Child Care and Petsafe.

Ms. Clancy received a B.A. degree from the College of the Holy Cross and earned the Accredited Advisor in

Insurance designation.

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MVAICBOARD OF DIRECTOR

WAYNE COTTER

PUBLIC MEMBER

Wayne Cotter worked for the New York Insurance Department for 25 years, serving as the

Department’s Director of Research for nearly two decades. In 2006, he began working as a

Financial Editor with the National Association of Insurance Commissioners (NAIC) at the

organization’s Wall Street office. He retired in 2012, but continues to conduct writing seminars on

behalf of the NAIC.

From 1985-1997, Mr. Cotter served as editor of The Bulletin, a monthly newsletter distributed to

over 5,000 insurers, producers and consumers. In addition, from 1998–2010, he was editor of The

Regulator, the journal-newsletter of the Insurance Regulatory Examiners Society. He is also the

author of numerous insurance-related articles.

He is currently on the Board of QUEST, a Lifelong Learning Center headquartered in downtown

Manhattan and is editor-in-chief of the organization’s literary journal.

Mr. Cotter earned a BA degree in economics from Gettysburg College and an MBA from St. John’s

University.

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MVAICBOARD OF DIRECTOR

GERARD M. (ROD) CURRAN Assistant Vice President, Underwriting GEICO

Rod Curran is assistant vice president of GEICO with responsibility for regional underwriting in

Woodbury, N.Y. This operation includes new sales, policyholder service and underwriting for New York

State. He also heads GEICO’s countrywide residual market profit center.

Before assuming his current duties in 1998, Curran served as assistant vice president for the northeast

regional claim operations for six years.

Curran joined GEICO after college as claims examiner and advanced to claims supervisor, liability manager,

and northeast regional liability director before being named assistant vice president of Claims in 1992.

Mr. Curran earned a bachelor’s degree at State University of NY at Geneseo, and an M.B.A. in business

management at New York Institute of Technology.

Curran serves on the Board of Directors of AIPSO (chairman 2004,05,14,15) since 1998, and Board of

Directors of Motor Vehicle Accident Indemnification Corp (MVAIC) of NY since 1997, (chairman - 2004

thru 2009). He is active in charitable work with the National Center for Disability Services (Abilities),

Juvenile Diabetes Research Foundation of Long Island, and his church.

He lives on Long Island, N.Y. with his wife, Virginia, and their three children.

Dec. 2015

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MVAICBOARD OF DIRECTOR

PATRICK O’MALLEY

New York Product Manager

PROGRESSIVE INSURANCE

Pat O'Malley is Progressive's New York Product Manager, a position he has held since September of 2007.

Pat is responsible for the profitability and growth of Progressive's $1B book of private passenger auto

business in the state, including product design/development/management as well as responsibility for

legislative and regulatory issues.

Pat joined Progressive more than 14 years ago, and has held several product and general management

positions, including managing Progressive's business in the states of Michigan, Minnesota and New

Hampshire and helping lead the team that launched Progressive's second generation usage-based insurance

product.

Prior to joining Progressive, Pat worked as a process engineer for Procter and Gamble. Pat holds a

bachelor's degree in chemical engineering from Carnegie Mellon University as well as an MBA from the

Weatherhead School of Management at Case Western Reserve University.

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MVAICBOARD OF DIRECTOR

MARGARET G. PALERMO

Senior Claim Field Director

ALLSTATE INSURANCE COMPANY

Margo Palermo is the Senior Claim Field Director of Allstate with the responsibility of the claim

department in the state of New York. This operation includes nine Market Claim Offices spread throughout

New York State.

Prior to assuming her current duties in 1988, she served as a Division Claim Manager for the metropolitan

New York area, including New York City, Nassau and Suffolk counties.

Ms. Palermo joined Allstate as a claims adjuster after graduation from college and has handled all aspects of

claim handling. She advanced from adjuster to unit manager, office manager and Division Claim Manager.

She earned both her bachelor and master’s degrees from St. John’s University.

Ms. Palermo has served on the Board of Directors of the Motor Vehicle Accident Indemnification Corp

(MVAIC) of New York since 2000, (Chair – 2009-2015).

She lives on Long Island.

Jan. 2016

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MVAICBOARD OF DIRECTOR

V. DANIEL ROBINSON II

President & CEO

NYCM INSURANCE

Dan Robinson has served as President, Chief Executive Officer and Board of Director of New York

Central Mutual Fire Insurance Company since 1993. Succeeding the Robinson family tradition, he is the

fifth President in the 100+ year existence of the company. Dan’s entire career has been with New York

Central Mutual Fire Insurance Company. He also serves as President, CEO and Board Member of A.

Central Insurance Company, a subsidiary company of NYCM, and as Vice President of A.F. Stager

Corporation.

Dan was appointed by Governor Andrew Cuomo to serve on the NYS Economic Development Council for

the Mohawk Valley. In addition, Dan serves as a Board Member of the Motor Vehicle Accident

Indemnification Corporation where he previously served as Chairman. He also serves on the Advisory

Board for Utica College in helping to create a program designated for a degree in Insurance Studies. Dan

serves as a Board of Director for NBT Bank, N.A., A.O. Fox Memorial Hospital, Excellus Blue Cross/Blue

Shield Regional Board, and NY First Governing Board under the administration of Independent Insurance

Agents & Brokers of New York.

Dan graduated from St. Bonaventure University, Olean, New York, in 1978 with a BBA in Marketing. He

and his wife reside in Oneonta, NY and have seven grandchildren.

Dan is very involved in charitable and community events in various capacities. His hobbies include golf,

skiing, and enjoying the outdoors.

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MVAIC

BOARD OF DIRECTOR

TIMOTHY D. ROGERS

Senior Vice President and Chief Financial Officer

THE TRAVELERS COMPANIES, INC.

Tim Rogers is Senior Vice President with financial oversight responsibilities for the Bond & Specialty

Insurance segment, the Personal Insurance segment and Enterprise Shared Services, including Claim,

Operations and Technology. Rogers joined Travelers in 2010 as Chief Financial Officer for Personal

Insurance.

Rogers began his career in public accounting at Arthur Andersen. After Arthur Andersen, he served with a

variety of financial services companies with increasing controllership and chief financial officer

responsibilities. Rogers is a certified public accountant.

Rogers earned a bachelor’s degree in economics and accounting from Holy Cross College. He lives in

Westport, CT with his wife, Janet, and their four children.

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MVAICCORPORATE OFFICERS

FRED FOSSETT

President

MVAIC

Fred Fossett is the President of the Motor Vehicle Accident Indemnification Corporation. He graduated

from Upsala College in 1991 with a Bachelor’s Degree in Accounting. Fred joined the Motor Vehicle

Accident Indemnification Corporation in 1999 as Manager of Information Technology, where he

redesigned the technical infrastructure of the entire company. He was quickly promoted to Operations

Manager, and subsequently to Accounting Manager, before he became a corporate officer in 2004 as the

Chief Financial Officer. Fred was appointed as President of the Motor Vehicle Accident Indemnification

Corporation in 2015.

CHRISTINA FRAZZITTA

Vice President and Human Resource Manager

MVAIC

Christina Frazzitta is the Vice President/Human Resources Manager of Motor Vehicle Accident

Indemnification Corporation. Her responsibilities include Employee Relations, Recruitment, Strategic

Planning & Development, Benefits Administration, and Policy Development & Documentation. Christina

joined Motor Vehicle Accident Indemnification in 2009. Prior to joining MVAIC she held an HR Generalist

position at Atlantic Traffic and Design Engineers. Christina holds a Bachelor’s Degree from Montclair State

University with a double concentration in Management and Marketing. She has also been a member of the

Society for Human Resource Management (SHRM) as well as the SHRM Local Chapter HR-NY since 2009.

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MVAIC

BOARD OF DIRECTORS COMMITTEE

Actuarial Committee

Chair - V. Daniel Robinson II NY Central Mutual Fire Ins. Co.

John E. Holdorf NY Central Mutual Fire Ins. Co.

Patrick O'Malley Progressive Insurance

Administrative Committee

Chair – Margo Palermo Allstate Insurance Company

V. Daniel Robinson II NY Central Mutual Fire Ins. Co.

Maura Clancy Clancy & Clancy Brokerage Ltd.

Audit Committee

Chair – Darryl Rahn Utica National Insurance Group

Tim Rogers Travelers Personal Insurance

V. Daniel Robinson II NY Central Mutual Fire Ins. Co.

Claims Committee

Chair – Darryl Rahn Utica National Insurance Group

Wayne Cotter Public Member

HR Committee

Chair – Darryl Rahn Utica National Insurance Group

Margo Palermo Allstate Insurance Company

Investment Committee

Chair - V. Daniel Robinson II NY Central Mutual Fire Ins. Co.

Tim Rogers Travelers Personal Insurance

Gerard M. Curran GEICO Insurance Company

Wayne Cotter Public Member

Nominating Committee

Chair - Maura Clancy Clancy & Clancy Brokerage Ltd.

Gerard M. Curran GEICO Insurance Company

Patrick O'Malley Progressive Insurance

Consumer Relations

Chair - Maura Clancy Clancy & Clancy Brokerage Ltd.

Wayne Cotter Public Member

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PART II

AUDITED FINANCIALS